Wednesday, September 24, 2008

Walter E. Weyl's New Democracy

Walter E. Weyl. The New Democracy: An Essay on Certain Political and Economic Tendencies in the United States. Introduction by Charles B. Forcey. New York: Harper and Row, 1964 (originally published by Macmillan Company, 1912). 369 pages. Available from, used and new for $7.89.

In his 1964 introduction, Charles B. Forcey notes that Walter Weyl was a precocious student and that while he was an undergraduate at the Wharton School of Commerce and Finance (p. xiii):

"he attracted the attention of Professor Simon Nelson Patten, one of the most creative and influential American economists of the day. Patten, who had done his graduate work in Germany, was a Germanophile who hoped to transform 'American civilization from an English to a German basis...The young German-American became not an admirer of the Kultur of Kaiser Wilhelm's Germany but instead of the prosperous and prudent civilization of republican France."

To be more accurate, Weyl was the son German-Jewish immigrants, and one cannot help but wonder whether the holocaust and the French collaboration therewith would have dampened his enthusiasm for European social and moral models. Weyl died at age 46 in 1919, only seven years after this book was published, and after he co-founded the New Republic magazine along with Herbert Croly and Walter Lippmann .

The book is a blueprint for Progressive reform. It is well written and accessible. Weyl makes clear (p. 94) that he views Progressivism as a stepping stone to socialism. In this, Weyl's book seems to controvert the claim of Louis Hartz that the Progressives were not socialist enough. Weyl is an advocate of one-step-at-a-time but he certainly is an advocate of socialism. I don't think it's accurate, based on this book, that the Progressives' ideology was necessarily not socialist, for Weyl is a socialist. He argues for Progressivism that implements socialism gradually.

He writes of the trusts:

“In the past we have tried to end our plutocracy by merely “smashing” the trusts, not realizing that with all their imperfections and immoralities they represent a stage in our development from the anarchic industry of half a century ago to the completely socialized industry of half a century hence.”

Most “Progressives” argue that Progressivism is a “third way” between socialism and laissez-faire. There are probably two categories of people who believe this. First, the industrialists who wanted the advantages of private ownership with the additional advantages of state support and protection for their privileged position probably anticipated that Progressivism would be a successful strategy to secure their position in society. Second, there were a large number of ordinary people who seriously believed that Progressivism would protect their rights and that it was democratic. Weyl, however, did not share this view. As one of the foundational writers of the Progressive movement, it is revealing that he explicitly saw the tendency of Progressivism to transform into socialism (e.g., p. 268). Weyl’s fixation on the advantages of scale lead naturally into a belief in socialism, which permits the greatest possible scale. Weyl notes at one point that there are potential limits to the size of firms, but he eloquently praises the advantages scale throughout the book. Thus, he, and the Progressives, admired the captains of industry. It may be that he naively believed that big businessmen would selflessly cooperate in his socialization project. But in the end, it was Progressivism that turned out to be a tool of big business rather than the other way around.

In the first chapter, "Disenchantment of America" Weyl suggests that there was, at the time of his writing (1912), considerable disenchantment with America. He does not do a good job of explaining why France or Germany were unable to absorb millions of immigrants as was America, or why immigrants preferred to come to America rather than attempt to transform Italy or Hungary into social democracies along the French model.

In Chapter II, "The Shadow Democracy of 1776", he argues that the 18th century American republic was not really a democracy. One sixth of the population was in slavery, there were indentured servants and disenfranchised white males who did not own property. "New Hampshire limited the suffrage to Protestant taxpayers" (p. 9), etc., and the ruling class was corrupt. "By such devices the balance of power under the Revolutionary constitutions was held in the hands of the gentlemen and kept away from those whom John Adams styled the 'simple-men'." "The law fell with especial severity upon the unrepresented, voiceless, and often uneducated 'simple-men' who feared the debtor's prison as they feared the omnipresent pillory and lash."

Weyl's history is exaggerated and somewhat idiosyncratic, but he has a mission. He writes "the greatest merit--and the greatest defect--of the Constitution is that it has survived..the constitution was never fairly presented...Even many who voted for the adoption of the Constitution were opposed to its principles..." Weyl does not refer to sources when making these assertions.

He is critical of Jacksonian democracy as well: "The wave of a new democracy--intensely individualistic, intensely confident, aggressive, dogmatic--passed east over the mountains from Michigan, Ohio and Tennessee into New York, Pennsylvania and Virginia. The new crude democratic movement fed on a number of social and political reforms...With the inauguration of this popular hero in 1829 began the spoils system, the short tenure of office, the popular boss and the fresh and wholesale corruption of parties..." (p. 18) but he notes that "with all its defects, the democracy of the America of 1829 was far in advance of that of the contemporaneous world."

But, of course, (p. 20):

"Today the tables are turned. America no longer teaches democracy to an expectant world, but herself goes to school to Europe and Australia...Politically we have made progress, but we are no longer so supremely confident that the men of 1787 could adequately foresee and rightly predestine the lives of the men of 1911."

In Chapter III, "The Conquest of the Continent", Weyl argues that the continental expansion resulting from manifest destiny "made American atomic" (p. 23). Immigration westward was due to economic causes (p. 25). "The New Englander profitably ruined his land and migrated to Ohio and Illinois (actually, the Massachusetts farms that were abandoned were the least productive in the first place). Canals, waste of resources, the railroad and migration contributed to prosperity. "Against the urgent cry for transportation...peculation, speculation, force, fraud, genius and courage,--all went into the new lines" (p. 28). Immigration grew rapidly after 1820. By 1889, the frontier was over and "the fierce resistless momentum remained, but there was nothing against which to strike" (p. 32). "The railroads alone had received over a hundred million acres, which they now held at their use and pleasure" (p. 32). "The new pioneer might be a soft-handed gentleman with a taste for intrigue and percentages, and as ignorant of woodcraft as was Daniel Boone of debenture bonds." Individualism led to excessive corporate greed rather than the pioneering spirit.

In Chapter IV, "The Individualist Spirit in America", Weyl starts by noting that "The westward march of the pioneer gave to Americans a psychological twist which was to hinder the development of a socialized democracy" and notes that American individualism resulted from cultural attributes as well as the frontier and manifest destiny. "It was not that the American industrial leaders imitated the pioneer, but that they were subject to conditions similar to his" (p.39). Much of this chapter decries "individualism run riot" (p. 44) and discussion of (p. 45) "the sequence of such untrammeled individualism" resulting in "a brutally unprincipled code of business morals." Implying that individualism implies corruption, Weyl argues (p. 45) that "the apotheosis of American individualism was the rebate" and that (p. 46) "the individualism of the American led to gambling; competition was gambling." But (p. 47) "it is of the essence of gambling that the few win and the many lose. Moreover, as the American game progressed, the rules were changed to suit the big players...The individualist became bewildered when his familiar rebating became double-cross rebating..." and (p. 48) "The individualist could not longer rely upon his automatic 'unalienable rights' and his fair field and no favor." But, concludes Weyl, "the cure of individualism was not individualism".

In chapter V, "The Sovereign American and His State" Weyl starts by arguing that "The political philosophy of the 'Fathers' might have been summed up in the phrase, 'the less government the better.' The nation was born of a rebellion against King and Parliament, and, in a certain sense, against government in general.

One of the characteristics of Weyl's Progressivism, which is also characteristic of all Progressivism, is the naive belief that planners can replace markets. He writes of the 18th century (p. 53):

"In those days a strong state could not have scientifically directed the exploitation of the continent, as Japan to-day is doing so successfully in Korea. The unknown continent could not have been curbed, for no legislators could have foreseen the development which millions of uncontrolled experimenters were to force."

Weak government in America was accompanied by corrupt politicians and strong political parties. Political parties became entrenched and began to ignore the popular will. "Corruption had become subtle, pervasive" (p. 62). "As business became synthetic and integrated, as the railroads, coal mines, banks, trust companies and insurance companies drew closer together, politics, which had grown from a small to a large, independent business became in some parts of America a mere branch in a still larger, integrated business. The state, which through the party formally sold favors to the large corporations, became one of their departments."

In Chapter VI, "Plutocratic Reorganization", Weyl argues that the national spirit was born in the West (p. 64) because it was in the West that easterners lost identification with their home states “and had accustomed themselves to a common loyalty to a larger political unit." Waste and mismanagement was everywhere in America (pp. 66-7). The political system was dominated by "crude political bosses...The citizen of 1876 contentedly died of typhoid because his city drank water befouled by other cities." (p. 68) "American business, reckless and implacable, showed even more the traces of a barbaric immoderation."

Eventually business aimed to rationalize itself. "While chemists, engineers, inventors, statisticians, agriculturalists, foresters, factory organizers all contributed to the reorganization of American business, the greater contribution was that of the financiers, the trust builders...The trust, at its best, represented a more economical and more profitable form of business organization than did the former competing business . Weyl adds, “At its best, the trust tended to bring order out of chaos; to substitute prevision and a broad outlook for the taking of a chance and a narrow view of the situation…The trust could refrain, if it wished, from many foolish, short sighted and antisocial actions.”

Thus, the Progressives held trusts in high esteem in many ways, but felt that if they could socialize them then they would work for society. In Chapter VII, “Our Resplendent Plutocracy” Weyl argues that the plutocracy is a natural outgrowth of a highly efficient form of industrial organization (p. 84). He argues for the technical efficiency of big business:

“Not only are monopoly and large scale production permanent, but they are rapidly trenching upon small scale and formerly competitive industries. The businesses in which there is a visible monopoly element are already overpowering in magnitude…These great amalgamations…grow fat by indulging the right to levy an increasing toll upon an increasing number of millions. Secure from competition (sometimes even from potential competition), the trust grows in value with the birth of each child and the advent of each immigrant. It raises prices, and each increase is immediately reflected in increased earnings, and in the issue of new capital…The trust succeeds because it is a unit. Consumers, laborers and competitors, on the other hand, are many and largely unorganized.” (p. 85)

Weyl argues that corporate officials are hyper-rational and can determine optimal prices and optimal wages to the hundredth of a penny (p. 86). The large firms can defeat all competitors, but charge extortionate prices at the same time. “The trust has the overwhelming advantage of unity.”

Weyl argues for enhanced disclosure to investors, a concept that was adopted more than 30 years later. He uses the phrase “divorce between ownership and control” (p. 88) 30 years before its famous usage by Berle and Means in “Modern Corporation and Public Policy”. He argues that shareholders are duped by top management through corporate secrecy. “Thus the plutocracy, based as it is upon a strategic position in our enormous industry, consists not only in the votes and the money power of the trust builders, but in the adherence of millions of men owning billions of dollars…Without the support of the small investors and of many men who have not even the wherewithal to purchase a single share of stock, the pillars of our resplendent plutocracy would crumble…”

Weyl notes that there are limits to scale, but ultimately those limits are, in his view, defined by the socialist state.

“In the past we have tried to end our plutocracy by merely ‘smashing’ the trusts, not realizing that with all their imperfections and moralities they represent a stage in our development from the anarchic industry of half a century ago to the completely socialized industry of half a century hence…The trusts are teaching us—as we are teaching them—that the end of it all must be production on the largest scale compatible with efficiency but a production so regulated as to ownership, stock issues, dividends, prices, wages and profits as to safeguard the whole community…”

In chapter VIII, “The Plutocracy in Politics” Weyl argues that although the plutocracy is no less ethical than other classes, the rationalization of methods has caused it to become “subtle, scientific, organized” (p. 97). “The organizing skill of the business magnate in systematizing political has changed it from a local though chronic phenomenon to one which is organic and nation-wide.” (p. 99). At the root of corruption are the trust and the industrial “oligarch” (p. 100). “In many cities this corrupting leadership fell into the hands of speculators in street railway, gas, electric light, water and other franchises” (p. 100).

The “main channel through which this corruption flows is the party”. (p. 104). “The party is corruptible because largely irresponsible. In our complicated government, where responsibility has always been as diffused as the light of an Arctic spring…” Corruption is facilitated by constitutional inhibitions on reform. “The plutocracy benefits by the sharp limitations which the Constitution places upon national and State efforts for reform…Not only does the Supreme Court decide questions of far greater moment than that of war or peace, not only does it hold a constitutional veto upon the most fundamental exercise of national sovereignty, but this right is exercised by men who have never received the suffrages of their fellow citizens.”

Some of the measures that Weyl thought should be taken include (p. 111) pensions or public insurance in case of old age, accident or sickness, regulation of hours, “effective regulation of the use of urban land”, and the “use of the powers of taxation and eminent domain for the purpose of furthering schemes to provide aid for the needy classes”.

Weyl argues that democracy must overtake the plutocracy (p. 119): “Step by step the invasion of the plutocracy into politics is accompanied by an invasion of the democracy into politics…”

In Chapter IX, “The Plutocracy and Public Opinion”, Weyl argues that the plutocracy aims to influence or control public opinion by “a subtle, devious and anonymous campaign of suppression, misrepresentation and falsehood.” (p. 125) “The trend of plutocratic domination of the press has been from influence to control and from control to ownership.”

Naturally, Weyl believes that the state should be expanded and criticizes the newspapers for not being “Progressive” enough. Of course, Progressivism jibes well with the plutocracy’s control of the media, as we know today. “The plutocracy preaches individual liberty, the glorious fruits of free contract, the doctrine of the influence of good men, the survival of the fittest in business, an untrammeled individualism, a tame state with a ring through its nose. It believes that while government is wise enough to put us in jail, it is not honest enough to be intrusted with our money and our business.”

But in Weyl’s view, the popular will will prevail (p. 134): “Even were all magazines and newspapers to be controlled and muzzled…it would not be possible to hold down the popular intelligence…Truth today is a volatile gas…” “The growing wisdom of the people is the final and irrefutable answer to the plutocracy’s attempts to corner the intellectual market.” (p. 136) “To-day, public opinion is seeking to become the ruling power in America. No overt opposition can withstand it. It cannot be bribed. It cannot be stifled…”

In chapter X, “Plutocracy and Efficiency”, Weyl argues that the plutocracy is efficient. “It can cure itself of minor ills. It can outgrow youthful immoderations…The plutocracy cites many pages of statistics to prove (what is already evident) that during its domination we have been growing stupendously wealthy” (p. 139).

Weyl recites the bureaucratic efficiency argument for business power (p.140). However, he did not anticipate the situation today, whereby big business is demonstrably inefficient and sub-optimal but it continues to exercise hegemony because of Weyl’s own Progressive model.

Moreover, Weyl argues that scale leads to better business ethics (p. 140): “Not being so hard pressed as were its forerunners, the plutocracy can afford a little virtue. Or, rather, it cannot afford not to have a little virtue, for our growing business concentration has changed the incidence of certain industrial evils, so that they who cause the damage occasionally suffer from it. From considerations of policy as well as because of its acknowledged leadership of industry, the plutocracy has been obliged to accept certain industrial responsibilities, and has thus developed its own code of social morality…With increasing concentration of business control, however, it is becoming wiser to mitigate certain evils of unregulated employment, and make the additional cost a fixed charge to customers…More and more, though as yet only partially and grudgingly, the ruling plutocracy gives up its petty business corruption, as a man puts away childish things…The mere progress of big business means the worst evils of little business. Under a plutocracy, as under a democracy, we should gradually end petty adulterations, small cheatings, ‘truck stores’, ‘company houses’ and the most flagrant abuses of patent medicine fakirs…Big business is zealous to ‘reform’ little business out of the running’…The plutocracy has its own program of social reform, which aims to reconcile it to the judgment of the nation…The plutocracy believes, as does the democracy, in an increase of national productivity. It therefore recognizes the advantages of education…It usually desires peace, social security and general well being.”

But the plutocratic conception of wealth leads to conspicuous consumption (p. 148). “The more rapidly our plutocracy, acting under the stimulus of profits, introduces the cooperative element into our businesses, the sooner will the democracy be able to adapt this cooperative element to the socialization of industry. The function of the plutocracy is to reduce chaos to order. But order is the very rock upon which democratic socialization is built…where the plutocracy means the greatest wealth; the democracy means the widest range of economic satisfactions.” (p. 150).

Weyl offers a utilitarian argument for “democracy” (p. 150): “The democracy interprets utilization as such a production, distribution and consumption of wealth as will give the highest excess of economic pleasure over economic pain to the largest number of people for the longest possible time.”

The trouble, of course, is that the utilitarian objective is vacuous. Who is to define it? Weyl? JP Morgan? Henry Paulson?

Thus, Weyl conceptualizes society as a single unit, an organism, a perception which is potentially totalitarian. He differentiates (p. 150) the plutocracy, which aims to maximize profit, with the democracy, which aims to maximize “the net ultimate advantage of the whole community and whether or not it lessens production and profit”. This is fallacious on several grounds. First, net ultimate advantage is unknowable. Second, the person who defines will skew the definition in his or her own interest. Third, it ignores the possibility that workers voluntarily contract to work a number of hours and that imposition of a rule about work will reduce the utility of many workers even if it increases the utility of others. It is impossible to assess social utility with precision, or to come up with a mean utility. Hence, Weyl’s argument is logically vacuous.

In a prophetic conclusion to the chapter Weyl writes:

“Secure in the adherence of its humble millions of imitators and admirers, the plutocracy looks forward to many generations of peaceful control of the labor, votes and thoughts of the American people. It relies on its enormous wealth and its strong position in industry, politics and the machines of public expression. It believes that it still possesses a mission and it cannot conceive of the possibility of any alternative social organization. The plutocracy hopes, by a self-directed curbing of its own worst impulses, to live many years in uncontested rule of the American nation.”

In chapter XI, “The New Social Spirit”

Weyl fails to understand (p. 159) that innovation depends on individual initiative and entrepreneurship; and on economic conditions that permit entrepreneurs to find financing and to benefit from their own ideas without oppressive taxation. He writes of the political reforms that he advocates as though they are the same as the technological innovations that were commonplace in his day. He does not understand that such innovation would be stalled by the very regulatory changes that he advocates.

Weyl writes of a “new spirit” (p. 160-1): “This new spirit, which is marked by a social unrest, a new altruism, a changed patriotism, and uncomfortable sense of social guilt, was not obrn of any sudden enthusiasm or quickening revelation…In many spheres of economic life the individual began to find more profit in his undivided share of the common lot than in his chance of individual gain…We are ceasing solely to adore successful greed, and are evolving a tentative theory of the trusteeship of wealth. We are emphasizing the overlordship of the public over property and rights formerly held to be private…what is attainable by the majority—life, health, leisure, a share in our natural resources, a dignified existence in society—is contended for by the majority against the opposition of men who hold exorbitant clams upon the continent. The inner soul of our new democracy is not the unalienable rights, negatively and individualistically interpreted, but those same rights, “life, liberty and the pursuit of happiness,” extended and given a social interpretation.”

"The inner soul of our new democracy is not the unalienable rights, negatively and individualistically interpreted, but those same rights, 'life, liberty and the pursuit of happiness,' extended and given a social interpretation.

"It is this social interpretation o frights which characterizes the democracy coming into being, and makes it different in kind from the so-called individualistic democracy of Jefferson and Jackson. It is this social concept with is the common feature of many widely divergent democratic policies...

"To-day,no democracy is possible in America except a socialized democracy, which conceives of society as a whole and not as a more or less adventitious assemblage of myriads of individuals. The old individualistic system pictured the individual freely bargaining with the state...The individualist point of view halts social development at every point...'Government should rest upon the consent of the governed' is a great political truth, if by the 'governed' is meant the whole people or an effective majority of the people; but if each individual governed retains the right at all times to withhold his consent, government and social union itself become impossible...

"...the engine of taxation, like all other social engines, will be used to accomplish great social ends, among which will be the more equal distribution of wealth and income...The government of the nation, in the hands of the people will establish its unquestioned sovereignty over the industry of the nation..."

In Chapter XII, “Democracy and the Class War” Weyl rejects the notion of class warfare characterized by what he calls “absolute socialism” (p. 171), for (p. 174) “no progressive impoverishment of the working classes, no ‘increasing misery’…has taken place. The workers have become not poorer but richer…Wages during the last half century have risen faster than prices.”

Rather, argues Weyl (p. 185), “To prove that our present distribution of income is immoral, we must base the immorality inductively on the social consequences of such distribution. The whole problem of distribution ceases to be one of absolute right and becomes one of relative utility…When social utility rather than abstract right becomes the guiding force of socialism, the problem will arise, whether a given property should be taken over or merely regulated, and its profits limited…In short, the problem will become one of ways and means…Society will seek to modify and socially utilize, rather than incontinently to destroy, our machinery of industrial organization (trusts, corporations, exchange, wage system, etc.).

p. 189 “In the decades to come—during the democratic socialization of America which has already begun—we shall hear less of this doctrine of the class war. There will be wide-ranging conflicts between coalitions of classes…We shall grow into democracy.”

In chapter XIII, “Democracy and the Social Surplus”, Weyl argues for “progess through prosperity. It is the increasing wealth of America, not the growing poverty of any class, upon which the hope of a full democracy must be based.”

Weyl argues that democracy is based on economic “social surplus” but lacks a coherent economic theory as to from whence such a surplus might arise.

He claims that (p.194) “democracy means material goods and the moral goods based thereon”. However, (p. 195) he offers an incoherent, indeed destructive, model for wealth creation. He seems to think that economic progress occurred independently from the evolution of capitalism. He severs the link between the distribution and creation of wealth. He seems to think that it was a coincidence that the only time that technological and economic progress occurred was the same as the only time in history (in Great Britain) that there was the rudiment of free market capitalism. This is not stupidity. It is dinosaur stupidity. He writes (p. 195):

“The creation of a social surplus, however, does not automatically or immediately give rise to a socialized democracy. It creates merely the opportunity for such a democracy. The new wealth does not distribute itself spontaneously according to the needs of the population, and, for a time, an increase in the social product may mean an actual lessening of the share of the masses. In the beginning of the era of a great social surplus, which we may approximately date from 1760 in England and from 1789 in France, the fruits of revolutionizing discoveries were largely monopolized by acquisitive men”.

He does not seem to realize that the reason for increased wealth was the freedom to keep the gains from the discoveries. What an odd way of thinking, and how heavily the nation has paid for Weyl’s limited understanding.

Having divorced the creation of wealth from the right to property, and assuming that wealth creates itself without human agency and motivation, Weyl then goes on to argue for what today would be called positive rights (p. 197):

“Just as, during the last few millenniums, we have evolved a theory of the sanctity of human life, by which the saving of life becomes theoretically more important than even the saving of property (although the facts often contradict this assumption), so to-day we are developing a theory of the dignity of human life, by which society, because of its greater wealth, becomes morally responsible not only for the mere physical survival of the individual but equally for the provision of facilities by which the highest physical, intellectual, moral and social capacities of all citizens, born and to be born, may best be secured.”

He calls this (p. 197) “the new wealth ethics of social improvement”.

“But to-day, our surplus has made us as sensitive to misery, preventable death, sickness, hunger, and deprivation as is a photographic plate to light…The disequilibrium between social surplus and social misery colors all our thoughts”

And (p. 200):

“Out of the ever-growing disproportion between social surplus and social misery, there evolves the doctrine of exploitation, a doctrine as yet vague.”

He has such an odd belief that wealth materializes without understanding that its materialization was dependent upon the laissez-faire system (p. 203):

“Until the material problems which beset mankind are solved; until misery, disease, crime, insanity, drunkenness, degeneration, ignorance and greed—which are the offspring of poverty—are removed, humanity will not be able to essay the problems of mind and of social intercourse…Everywhere there are signs of a stupendous productiveness.”

In chapter XIV, “The Levels of Democratic Striving” Weyl argues that as Americans advance with respect to wealth they will advance with respect to democracy. But he sees this as a spontaneous phenomenon, unrelated to laissez-faire.

There are three levels of democratic striving, economic, education and intellectual

He argues that “ a diffused education, like a diffused prosperity, is necessary to democracy.”

Weyl is optimistic about the media and about the American public’s ability to “reconstitute America according to the wishes of the majority” (p. 233)

He is blissfully unaware of fundamental blockages to rationality in political decision making that Walter Lippmann pointed out. Likewise, the brokerage of special interest groups and the information blockages that inhibit public interest decision making are well known to us today. All of Progressivism is based on ignoring this phenomenon.

In Chapter XV, “The Gathering Forces of the Democracy” Weyl argues (p. 236) that “special group interests conflict with general group interests” Different ethnic groups can work together, argues Weyl. Hatred of the plutocracy unites many economic and ethnic groups I p. 249):

“Thus the plutocracy is more and more opposed by an ever larger number of social groups and individuals, not only for what it does and for what it is, but for the deepr economic tendencies which it represents.”

Weyl seems to mistakenly believe that the late nineteenth century was a period of declining real wages. One key point is the emphasis on consumerism. As well, once again, lack of information about the facts is basic to the Progressive viewpoint (p. 251):

“As prices continue to rise, however, as a result (among other causes) of our gradually entering into a monopoly period, a new insistence is laid upon the rights of the consumer, and political unity is based on him. Where formerly production seemed to be the sole governing economic fact of a man’s life, to-day many producers have no direct interest in their product…The chief offense of the trust becomes its capacity to injure the consumer.”

In chapter VXI, “The Tactics of the Democracy”, Weyl argues that American traditions, the “growing social surplus” (arising from thin air in Weyl’s view) and “the wide diversity among the groups striving for democracy” are the “primary factors” to determine “the main tactics and methods of American democracy.” (P. 256).

“As a result of all these causes, our democracy will probably not need to resort to violence.”

Sticking to the static Progressive model, Weyl argues for nationalization of the railroads, much as George W. Bush argues for nationalization of investment companies (p. 260):

“If to-day the nation were to buy up its railroads and run them efficiently, the mere accretion in value during the next generation or two would make the purchase so profitable that the collective people could well afford to pay a fair price…So generally the stupendous present values of monopolies, which the nation may in the near future be compelled to take over, will seem ridiculously small fifty or a hundred years hence...Social appropriation without confiscation, however, involves a transformation much less likely to be violently resisted”

Thus, Weyl argues for socialism through eminent domain purchase. “ By taking this least line of resistance, the democracy finds allies where a more uncompromising group would find enemies.”

Weyl argues against socialization of small farms and businesses, but socialization of big business.

More so than other writers, Weyl makes explicit the idea that gradual “Progressive” steps will lead to outright socialism (p. 268).

Weyl argues for political correctness (not in those words) among the "democratic elite and laments that the majority of the public is not politically correct (pp. 270-1):

"The democracy, in its forward march, must keep a watchful eye to the rear. It must promote a constant cohesion within its ranks...The goal of internal harmony is more easily recognized than obtained...A still heavier burden upon the democratic movement is the residual inertness of the mass. In part this is a defect of education, for knowledge is desire, and men want when they see. Outside the groups of men who are always or generally on the side of democracy, however, there is that wide fringe of indifferent men and women, who lack the leisure, the education or the social conscience to see public problems other than vaguely and intermittently, and who oppose a sluggish resistance to the realization even of their own perceived advantages.

The almost insane weakness of Weyl's argument is encapsulated on p. 273:

"We must throw over our conceptions of cost and value (which measure wealth by effort) and must accept new ideas of utility (which measure wealth byu pleasure and satisfaction). We must recognize that we have the social wealth to cure our social evils--and that until we have turned that social wealth against poverty, crime, vice, disease incapacity and ignorance, we hav enot begun to attain democracy. We must change our attitude towards government, towards business, towards reform, towards philanthropy, towards all the facts immediately or remotely affecting our industrial and political life. Such an education of its own members, present and prospective, must be a necessary part of a democratic campaign."

There is clearly a link to the concept of "social justice dispositions" in use in education schools.

In chapter XVII, "The Industrial Program of the Democracy" Weyl opens by stating frankly (p. 276):

"The industrial goal of the democracy is the socialization of industry." Socialization of industry means (p. 279) viewing business life from the standpoint of society and not solely from that of the present beneficiaries or directors of industry. It is such a coordination of business as will permanently give the greates happiness and the highest development to the largest number of individuals and to society as a whole.

"Socializaton is thus a point of view...

"In certain industries socialization may involve a government monopoly...

(p. 280) "Socialization conisders profit seeking neither as a universally beneficent regulative impulse nor as the stubborn root of all industrial evils. It regards profits and wges as contributions to a larger end to be balanced as such against other results of the industry. If a given industry creates on the whole an excess of costs over utilities, or if it affords a smaller surplus of utilities than would the same amount of capital and labor invested otherwise, then it is within the province of society to reform or even to bolish the industry

On p. 284 he argues for the nationalization of "monopolies" and adds:

"How far and how rapidly the federal govenrment will take over private business is a question which to-day cannot yet be answered..."

and on p. 291:

"In the future we shall enormously increase the extent of regulation. Not only can we pursue an active social policy by means of the regulation of industry, but we can also so direct and restrain and guide the strong economic impulses of society as to make the product of industry not only larger, but more widely and more fairly distributed."

Weyl's use of the word "we" in the above paragraph might mean:

(a) the royal "we" as in the Queen of England
(b) "we" as in a few elitist "Progressives" who get to boss everyone else around
(c) a single dictator like Adolf Hitler or Josef Stalin
(d) a beneficent democratic consensus that reflects each and every one of us
(e) all of the above
(f) none of the above because Weyl and the Progressives were confused

However, Weyl repeatedly argues for minimal amounts of regulation (pp. 292-4): "In the regulation of industry it is not necessary or deisrable to pass laws where the personal interests involved, whether of employer or employed...are capable of accomplishing the same result...To an increasing extent we are putting our trust in business publicity. It is a splendid means of unchaining public resentment or inciting public approval..."

"Complete industrial socialization does not stop short at production and sale. It does not conent itself with regulating the conditions under which articles shall be produced or the prices at which they shall be sold. it requires a reasonable and just distribution of the product of industry..."

Weyl's naivete about the creation of wealth is especially jarring in this sentence:

"There are several ways in which the continued growth of enormous fortunes may be hampered if not prevented. The social wealth to be created may be deflected to the community by a governmental acquisition of natural monopolies. During the next one hundred years American railroads, American mines, American forests and American lands are likely to increase stupendously in value...By the gradual acquisition of such properties, the community could divert to itself a large part of this probable new wealth...Theoretically there are no limits to state action along these lines. The sovereign state has a primordial, intrinsic, underlying right to all property, more valid in the final instance than the property right vested in the legal owner."

In chapter XVIII, "The Political Program of the Democracy", Weyl argues that democracy "seeks to break the power of a politically entrenched plutocracy". Again, Progressivism failed in this goal (p. 298):

"With such democratic controlof government there can be no permanent democratic control of industry...In attempting to secure political control, the democracy proceeds along five paths..."

The five paths are:

-democratic control of parties
-democratic control of elections
-democratic control of representatives
-direct legislation by the people
-increased efficiency of the democratized government

The reason that the Progressive approach to reform failed is well covered in Mancur Olson's work and George Stigler's "Theory of Economic Regulation". The referendum, the recall, direct primaries, Civil Service reform, universal suffrage (especially ending gender and racial exclusion), ending of voter fraud have failed to overcome the brokerage of special interests.

Weyl writes: "Our governmental system must be as understandable as is compatible with efficiency and with a just representation of all classes. We must have a glass-house government; a government standardized and systematized; a governmetn with double entry bookkeepping; with conspicuous heads...Obscurity works in the interest of special classes..."

Yet, after a century of progressive reform, government is as corrupt as ever.

Weyl argues that in order to implement his reforms, the Constitution must be made as elastic as possible (p. 316).

P 318: "A radical revision of the Constitution by a special constitutional convention such as was contemplated by the document itself, would be one of the greatest single steps towards establishing a political democracy in the United States. "

National health insurance was long a progressive objective: "To secure the health an dlives of the poeple we must socialize the business of health-keeping. I would pay us in the higher efficiency and better tone of the community to spend annually hundreds of millions of public money upon the prevention and cure of disease."

Weyl was not unaware of the threat of totalitarianism:

"The most diverse classes are united upon the policy of educating the whole people because upon that education depends the safety of the various groups which constitute the nation. The very possibility of misrule by a passionate, accidental majority is the saving menace of a democracy. It is this menace which crumbles our intellectual snobbery and abases our intellectual price"

He adds:

(p. 329) "Our future education must exalt social obligations above mere competitive egoisms. Our new education must expand beyond our expanding schools."

Weyl's proscriptions about consumption have a flavor of authoritarianism (pp. 330-1):

"Much of this unwise and antisocial consumption of wealth is due to ultra-individualism. In consumption, men lack the discipline and coordination which they have learned in production. Moreover, three is manifested in consumption a certain instinctive conervatism, which lies deep in all of us...To socialize our consumption we must therefore depend upon the direct or indirect action of the state and upon the gradual education of the consumers...The state can also socialize consumption by furnishing a larger number of common goods."

In the final chapter Weyl dismisses the possibility of democracy transforming into a totalitarian state.

New Democracy perfectly illustrates the key flaws of Progressivism: its naive belief in structural changes to democratic processes; its severing of the link between rewards and production; its belief that economic progress did not rely on property rights; its failure to understand creative destruction; and its misunderstanding of the role of spontaneous order in optimally allocating resources. Weyl's blind devotion to socialism is evident throughout this book. It is a revealing source of information about the goals and fallacies of what later became known as "liberalism".


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